Home & Kitchen Brand - Series A Fundraising

Valuation + Due Diligence + Pitch Deck + Fundraising Success

Home Kitchen Brand – Series A Fundraising

Client Profile

  • Business: Premium home & kitchen products
  • Brand: "LuxeHome"
  • Stage: 4 years old, ₹18 Cr revenue, profitable
  • Team: 45 employees
  • Objective: Raise ₹8-10 Cr for pan-India expansion

The Challenge

Rahul and Nisha had bootstrapped LuxeHome to ₹18 Cr revenue with healthy margins. Now they needed capital to scale:

Growth Opportunity:

  • Strong brand recognition in North India
  • Expansion to South and West markets needed
  • Wanted to launch in 500+ retail stores
  • Build brand-owned D2C website (currently 80% marketplace)
  • Inventory investment required: ₹3 Cr
  • Working capital for expansion: ₹2 Cr
  • Marketing and brand building: ₹3 Cr

Fundraising Inexperience:

  • Never raised external capital before
  • No idea how to value the company
  • Didn't know what investors would scrutinize
  • Pitch deck was product catalog, not investment opportunity
  • No financial model beyond basic projections
  • Unsure: How much equity to give? What terms to accept?

"We knew we needed ₹8-10 crores to scale, but had zero experience with investors. Friends said we'd need to give up 30-40% equity. We didn't know if that was fair or how to negotiate."

Our Solution - Complete Fundraising Advisory

Phase 1: Professional Business Valuation (Month 1)

Financial Analysis (3 years historical):

Year 1: ₹8.5 Cr revenue, ₹1.2 Cr EBITDA (14% margin)
Year 2: ₹12.5 Cr revenue, ₹2.1 Cr EBITDA (17% margin)
Year 3: ₹18 Cr revenue, ₹3.4 Cr EBITDA (19% margin)

Growth rate: CAGR of 45%
Margin expansion: +5% over 3 years
Profitability: Strong and improving

Valuation Methodologies Applied:

1. Comparable Company Analysis (Trading Comps):

  • Identified 8 comparable public companies (home brands)
  • Median EV/Revenue: 2.5x
  • Median EV/EBITDA: 12x
  • Implied valuation: ₹45-48 Cr

2. Precedent Transaction Analysis (M&A Comps):

  • Identified 5 recent acquisitions in home/lifestyle space
  • Median EV/Revenue: 3.0x
  • Median EV/EBITDA: 14x
  • Implied valuation: ₹54-58 Cr

3. Discounted Cash Flow (DCF):

  • 5-year projections with terminal value
  • Revenue growth: 40% → 35% → 30% → 25% → 20%
  • EBITDA margin: 19% → 21% → 23% → 24% → 25%
  • Discount rate (WACC): 18%
  • Implied valuation: ₹52 Cr

Recommended Pre-Money Valuation:

  • Range: ₹48-52 Cr
  • Target: ₹50 Cr pre-money
  • Rationale: Middle of range, supported by multiple methodologies

Funding Ask:

  • Capital needed: ₹10 Cr
  • At ₹50 Cr pre-money → 16.7% dilution
  • Post-money valuation: ₹60 Cr

Phase 2: Comprehensive Due Diligence Preparation (Month 1-2)

Financial Due Diligence:

  • Restated 3-year financials to investor-grade standards
  • Revenue reconciliation across all platforms
  • Cleaned up expense categorization
  • Verified all assets and liabilities
  • Tax compliance review (no surprises)
  • Related party transaction disclosure
  • Contingent liabilities analysis

Findings & Remediation:

  • Found ₹12L personal expenses mixed in business accounts
    • Reversed and documented
  • GST returns had minor discrepancies in 2 months
    • Filed revised returns proactively
  • One vendor invoice missing GST number
    • Obtained retroactively and documented

Legal Due Diligence:

  • Company incorporation documents verified
  • All shareholder agreements current and clean
  • Trademark registration status confirmed
  • Employment contracts for all employees
  • Vendor and customer contracts reviewed
  • No pending litigation
  • IP ownership clearly documented

Operational Due Diligence:

  • Supply chain mapped and verified
  • Top 10 vendors confirmed (no single vendor >20%)
  • Customer concentration analyzed (no single customer >15%)
  • Manufacturing partners visited and verified
  • Quality control processes documented

Prepared Data Room: Organized 200+ documents in 12 categories:

  1. Corporate documents and governance
  2. Financial statements and tax returns
  3. Contracts (vendors, customers, employees)
  4. Intellectual property
  5. Product portfolio and pricing
  6. Marketing and sales data
  7. Operations and supply chain
  8. Team and organization
  9. Technology and systems
  10. Insurance and compliance
  11. Real estate and assets
  12. Projections and business plan

Phase 3: Investor-Grade Pitch Deck Creation (Month 2)

Created 18-Slide Deck:

Slide 1-3: Problem & Opportunity

  • ₹45,000 Cr Indian home decor market
  • Growing at 15% CAGR
  • Shift from unorganized to organized/branded
  • Middle class aspiration for premium products

Slide 4-6: Solution & Product

  • LuxeHome's premium positioning
  • Design-led, high-quality products
  • 120 SKUs across 6 categories
  • Unique value proposition vs. competitors

Slide 7-9: Business Model & Traction

  • Current: 80% marketplace, 20% wholesale
  • Target: 50% D2C, 30% marketplace, 20% retail
  • Strong unit economics:
    • Average order value: ₹2,400
    • Gross margin: 48%
    • Contribution margin: 32%
    • LTV/CAC: 4.2x
  • Impressive growth metrics:
    • 3-year revenue CAGR: 45%
    • Margin expansion: +5%
    • Repeat purchase rate: 38%

Slide 10-12: Market & Competition

  • Competitive landscape mapping
  • LuxeHome's differentiation (design, quality, brand)
  • Market opportunity: ₹500 Cr achievable in 5 years

Slide 13: Team

  • Founders: Rahul (10 years retail experience), Nisha (design background)
  • Key hires: COO (ex-Pepperfry), CMO (ex-Fabindia)
  • Strong advisory board

Slide 14-16: Financials & Projections

  • Historical performance (3 years)
  • 5-year projections:
    • Year 4: ₹28 Cr (55% growth)
    • Year 5: ₹42 Cr (50% growth)
    • Year 6: ₹60 Cr (43% growth)
    • Year 7: ₹82 Cr (37% growth)
    • Year 8: ₹108 Cr (32% growth)
  • Path to ₹100 Cr revenue in 5 years
  • EBITDA margin: 19% → 25%

Slide 17: Use of Funds

  • Inventory & working capital: ₹5 Cr
  • D2C website & tech: ₹1.5 Cr
  • Retail expansion (500 stores): ₹2 Cr
  • Marketing & brand: ₹1.5 Cr

Slide 18: The Ask

  • Raising: ₹10 Cr
  • Pre-money valuation: ₹50 Cr
  • Use of funds and milestones clearly mapped

Phase 4: Investor Targeting & Outreach (Month 3)

Created Target Investor List:

  • Tier 1: Early-stage VCs (consumer brands focus) - 8 firms
  • Tier 2: Angel networks (Indian Angel Network, LetsVenture) - 5 groups
  • Tier 3: Family offices (consumer sector interest) - 6 offices
  • Tier 4: Strategic investors (home/lifestyle companies) - 4 companies

Outreach Strategy:

  • Warm introductions via network (70% success rate)
  • Cold emails with compelling one-pager (15% response)
  • Demo days and pitch events (3 opportunities)

Investor Engagement:

  • Initial pitches: 15 investors
  • Follow-up meetings: 9 investors
  • Deep DD initiated: 5 investors
  • Term sheet received: 3 investors

Phase 5: Term Sheet Negotiation & Closing (Month 4-5)

Term Sheets Received:

Option 1 - Large VC:

  • Amount: ₹10 Cr
  • Pre-money: ₹45 Cr (18.2% dilution)
  • Liquidation preference: 1.5x participating
  • Board seats: 2 (founders 2, investor 2, independent 1)
  • Anti-dilution: Full ratchet
  • Founder vesting: 4-year with 1-year cliff

Option 2 - Angel Syndicate:

  • Amount: ₹8 Cr
  • Pre-money: ₹48 Cr (14.3% dilution)
  • Liquidation preference: 1x non-participating
  • Board seats: 1 observer
  • Anti-dilution: Weighted average
  • Founder vesting: None

Option 3 - Family Office:

  • Amount: ₹12 Cr
  • Pre-money: ₹50 Cr (19.4% dilution)
  • Liquidation preference: 2x participating
  • Board seats: 1
  • Anti-dilution: Weighted average
  • Quarterly revenue targets with penalties

Negotiation Strategy:

Played options against each other:

  • Used VC's interest to improve angel terms
  • Used family office's higher amount for leverage
  • Focused on valuation + terms (not just valuation)

Final Negotiated Terms:

  • Investor: Combined round (VC ₹6 Cr + Angels ₹4 Cr)
  • Pre-money: ₹50 Cr
  • Total raise: ₹10 Cr
  • Dilution: 16.7%
  • Liquidation preference: 1x non-participating
  • Board composition: Founders 2, VC 1, Angels observer, Independent 1
  • Anti-dilution: Weighted average (broad-based)
  • Founder vesting: Negotiated out
  • No revenue targets or penalties

Closing Support:

  • Coordinated legal documentation
  • SHA (Shareholders' Agreement) review and negotiation
  • MCA filings and compliance
  • FEMA compliance for angel NRI investors
  • Fund transfer and share allotment

The Results

Fundraising Success:

✅ Raised: ₹10 Cr (100% of target)
✅ Valuation: ₹50 Cr pre-money (achieved target)
✅ Dilution: Only 16.7% (vs. friends' warning of 30-40%)
✅ Timeline: 5 months (vs. typical 9-12 months)
✅ Terms: Founder-friendly (no onerous conditions)

Due Diligence Outcome:

  • Zero red flags discovered
  • Fastest DD process investors had seen ("exemplary preparation")
  • No renegotiation of terms post-DD
  • Investors gained confidence from organized data room

Business Impact (24 months post-funding):

Revenue Growth:

  • Pre-funding: ₹18 Cr
  • 12 months: ₹29 Cr (61% growth)
  • 24 months: ₹46 Cr (58% growth)
  • Exceeded projections by 10%

Market Expansion:

  • Launched D2C website (now 35% of revenue)
  • Retail presence: 420 stores across 8 cities
  • Entered South India successfully
  • Export pilot to Middle East started

Profitability:

  • EBITDA margin: 19% → 22% → 24%
  • On track to 25% target

Valuation Growth:

  • Series A: ₹60 Cr post-money
  • Series B (18 months later): ₹185 Cr pre-money
  • 3x growth in 18 months
  • Founders' 83% stake now worth ₹154 Cr

Founder Wealth Creation:

Before Series A:

  • Owned 100% of ₹18 Cr revenue business
  • Paper valuation: ₹35-40 Cr (guess)
  • No third-party validation

After Series A:

  • Own 83% of ₹60 Cr valued business
  • Stake worth: ₹50 Cr (validated)
  • ₹10 Cr cash in bank for growth

After Series B (18 months):

  • Own 68% of ₹185 Cr valued business
  • Stake worth: ₹126 Cr
  • Founders became crorepatis on paper

Cost-Benefit Analysis:

Investment in Fundraising:

  • Valuation services: ₹1,25,000
  • Due diligence prep: ₹2,00,000
  • Pitch deck creation: ₹75,000
  • Fundraising advisory: ₹3,00,000 (retained)
  • Legal fees: ₹2,50,000
  • Total: ₹9,50,000

Value Created:

  • Raised ₹10 Cr at favorable terms
  • Saved ~20% dilution vs. uninformed fundraising
  • Value of saved equity: ₹12 Cr (at current valuation)
  • Faster close saved 4-6 months of runway
  • Better terms prevent future disputes

ROI: 126x on fundraising advisory investment

Client Testimonial

“We thought ₹10 lakh for fundraising advisory was expensive. But they helped us raise ₹10 crores at ₹50 Cr valuation with only 16.7% dilution. Friends who raised around the same time gave up 35-40% equity. That difference is worth ₹12 crores at our current ₹185 Cr valuation. The investor-ready data room they created also helped us close Series B in just 2 months. Best investment we ever made.”

Rahul & Nisha — Co-Founders, LuxeHome

Key Takeaways

✓ Professional valuation prevents under-valuation and over-dilution
✓ Thorough due diligence prep accelerates fundraising by 6+ months
✓ Investor-grade pitch deck is critical for credibility
✓ Multiple term sheets enable better negotiation
✓ Founder-friendly terms matter as much as valuation
✓ Cost: ₹9.5L advisory → Saved: ₹12Cr+ in dilution
✓ Preparation determines both success and terms quality
✓ Every % of equity matters enormously as company scales

Mehtalogy LABS